R Sidebottom; J Pickett (TC6724)
In July 2002 S bought a property that was later transferred into the joint ownership of him and P his then wife. They intended to redevelop it or obtain planning permission and sell it at a profit. For this they set up a company MPL in June 2003 as equal shareholders but S was the sole director. The taxpayers and MPL entered into an agreement for the company to develop the property for residential use. S advanced lump sums from his bank account to MPL. These were treated in MPL’s accounts as a director’s loan. None were repaid.
It was later agreed to wind up MPL and the property was sold. Neither taxpayer disclosed the disposal in their tax returns.
In February 2017 after a compliance check HMRC issued assessments for the gain. It considered that because the cost of obtaining...
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